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DealBook: Lagardère Sells Stake in EADS for $3 Billion

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Paris, 9 April 2013

Lagardère completes the sale of its entire stake in EADS

NOT FOR DISTRIBUTION IN THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN

Lagardère announces the completion of the sale, of circa 61 million shares of EADS, representing approximately 7,4% of the share capital of the company, for a total amount of circa 2,283 million Euros, by means of a private placement, through an accelerated bookbuilding with qualified investors.

EADS has participated to this placement for a total amount of circa 500 million Euros, at the price of the book.

Upon completion of this transaction, Lagardère will have sold its entire stake in EADS.

Disclaimer

This announcement is for information purposes only and does not constitute an offer to sell or a solicitation to buy any securities, and the offer of EADS shares by Lagardère does not constitute a public offering in any jurisdiction, including in France.

This communication is for distribution in the United Kingdom only to (i) investment professionals falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth entities and other persons to whom it may lawfully be communicated, falling within article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”).

This announcement is not an offer for sale of securities in the United States. The offer and sale of the securities referred to in this announcement has not been, nor will be, registered under the United States Securities Act of 1933 (the “Securities Act”) and the securities may not be offered or sold in the United States absent such registration or an applicable exemption from the registration requirements of the Securities Act. There will be no public offering of the securities in the United States in connection with this transaction.

Any investment decision to buy shares in EADS must be made solely on the basis of publicly available information regarding EADS. Such information is not the responsibility of Lagardère.

Release, publication or distribution of this press release is forbidden in any country where it would violate applicable laws or regulations.

Article source: http://dealbook.nytimes.com/2013/04/09/lagardere-sells-stake-in-eads-for-3-billion/?partner=rss&emc=rss

Airbus Parent Expected to Alter Base of Its Investors

The restructuring, which was the subject of a board meeting late Sunday, would dissolve a decade-old agreement that gave the two countries an effective veto over company strategy, a factor that contributed to the failure of a proposed merger between EADS and BAE Systems of Britain in October.

One person familiar with the details of the plans said the state-owned German bank KfW was expected to acquire a 7.5 percent stake currently held by a consortium of public- and private-sector German banks, as well as another 4.5 percent from the German automaker Daimler, which owns 15 percent of the company.

The French government, which already owns 15 percent of EADS directly, has agreed to relinquish 3 percent of its voting rights in the company, said the person, who spoke on condition of anonymity because the board had not yet voted on the change. The French would continue to hold the full dividend rights of its 15 percent stake, but ownership of the other 3 percent would be transferred to a foundation, registered in the Netherlands, that would have no voting rights.

Details of the accord were expected to be announced Monday, the person said.

The new arrangement would end a shareholder pact that dates to the creation of EADS in 2000, which was designed to balance the national interests of France and Germany by giving a core group of shareholders special veto rights and the right to appoint the members of the company’s 11-seat board.

The core shareholder group has until now included Daimler, as well as Lagardère the French magazines and missiles conglomerate, which owns a 7.5 percent stake in EADS and whose chairman, Arnaud Lagardère, is currently chairman of the EADS board.

Both Daimler and Lagardère have long made clear their desire to sell their stakes, which neither considers core to its operations. The dissolution of the shareholder agreement now frees the two companies to dispose of their holdings. Some of the shares could be sold on the open market, but European news media reports last week suggested that EADS was also considering a share buyback that could absorb a significant portion of the outstanding shares.

EADS was expected to call for an extraordinary shareholders’ meeting in the first quarter of next year to approve changes to the ownership structure as well as a new slate of board directors.

Mr. Lagardère was not expected to be renominated as chairman, although he was likely to be replaced by another Frenchman. According to EADS’s bylaws, the chairman and chief executive must be split between a French and a German. Thomas Enders, who took over as chief executive in June, is a German.

EADS has long sought a new shareholder arrangement that would preserve the politically sensitive balance of influence between France and Germany without subjecting key management decisions to the approval of politicians in Paris and Berlin.

The impact of such political interference was on prominent display in October, when the German government led by Chancellor Angela Merkel failed to approve the EADS-BAE combination, sinking a deal that would have created the world’s largest aerospace group.

Article source: http://www.nytimes.com/2012/12/03/business/global/eads-restructuring-expected-to-enhance-germanys-holding.html?partner=rss&emc=rss

DealBook: Political Haggling Thwarts Merger of Aerospace Giants

11:51 a.m. | Updated

EADS and BAE Systems ended mergers talks on Wednesday after political haggling among France, Germany and Britain killed a deal that would have created a European behemoth in aerospace and defense.

The companies’ announcement, following months of negotiations, came just hours before a deadline set by the British authorities to decide whether to proceed. The European aerospace giants aid they had been able to reach agreement on the commercial terms for the merger, but had not been able to win government support.

The breaking point was over the size of the new stakes to be held by the European governments and other political considerations,

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Under the proposed deal, France, which currently owns 15 percent of EADS, the parent of Airbus, would have had its share reduced to 9 percent. The German government had sought an equal stake in the merged company. (Spain’s stake would have been around 3 percent.)

In comments to reporters in London, Ian G. King, the chief executive of BAE, indicated that Germany was the main sticking point. “That would be an accurate representation,” he said, according to Reuters.

“We are obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders,” he said in a statement.

One person with knowledge of the British side of the negotiations said that London and Paris had made significant progress over the last week toward bridging their differences over share ownership. But German negotiators did not seem prepared to compromise on their key concerns.

”It became clear over the last few days that there was a lack of German support for the deal overall,” said the person, who requested anonymity because the talks were confidential. ”They appeared to be struggling to see what the advantages of the deal were for Germany.”

A spokesman for the German chancellor, Angela Merkel, released a terse statement on Wednesday acknowledging the decision to abandon the merger. ‘‘For the German government, the priority is that EADS is able to continue its positive development in all its fields of business,’’ Steffen Seibert, a German government spokesman, said.

The collapse of the huge deal raises questions about future cross-border transactions in Europe.

“That government disagreements killed this deal carries a lesson for consolidation of the European defense market as a whole,” said Guy Anderson, a senior military industry analyst with the research firm IHS Jane’s. “Meshing the interests of investors and governments and bringing together state-owned, privately-owned and quasi-state owned corporations together will prove to be a Herculean task.”

By joining forces, EADS and BAE Systems had hoped to create a stronger rival to Boeing, the worlds biggest defense and aerospace company. The activities of the combined company would have been evenly split between the passenger jet market and the military market.

The passenger jet market is growing rapidly, but remains volatile. Military contracts provide more steady revenues, but large European countries and the United States have been reining in their military spending,

In September, BAE and EADS, which manufactures the Airbus passenger aircraft, said they were in discussions about a potential merger that would create an industry giant with combined market value of about $50 billion.

“It’s unlikely they will have the stomach to go through this again any time soon,” Richard Aboulafia, an aerospace analyst with the Teal Group in Washington, said on Wednesday.

In their merger considerations, EADS and BAE wanted to limit government-owned shareholdings over concerns they would jeopardize potential new defense contracts in the United States.

Under the terms of the deal, the combined company would have had a dual listings in Britain and the Netherlands, and control would have been split among France, Spain and Germany and two strategic industrial shareholders.

Germany does not currently have a stake in EADS, but a a state-owned bank had planned to buy the EADS shares held by Daimler. The position would have given Germany a smaller stake than France in the combined EADS-BAE.

Germany had also called for guarantees over long-term employment for EADS employees based in the country. It had also wanted parts of the company’s headquarters to remain in Germany.

Still, a successful merger would have put an end to a decade-old division of control between the French and German shareholders and replaced it with a more conventional governance structure.

Speaking at a press conference in Madrid, French President François Hollande, was unapologetic about his country’s desire to maintain its shareholding in a strategic aerospace and defense company. The decision to abandon the merger, he said, rested with the two companies.

”It’s not cause for me to either express regret or to rejoice,” he said.

Britain, meanwhile, had ”always been clear that it could se the commercial logic of the deal,” the office of Vince Cable, Britain’s business secretary, said in a statement. ”But it would only every work if it met the interests of all the parties involved.

The British government has a so-called golden shareholding in BAE Systems, which would allowed politicians to veto any potential deal.

While politicians may have been the stumbling block, some investors also had balked at the deal.

On Monday, the British pension fund Invesco Perpetual, the largest investor in BAE Systems, raised issues about the combined company’s ability to continue to operate in the American defense market.

“Invesco is very concerned that the level of state shareholding in the combined group will heavily impair its commercial prospects,” the firm said in a statement.

In London trading, shares of BAE closed down 1.4 percent, while EADS shares finished up 5.3 percent.

In the wake of the collapsed deal, BAE Systems, which has sought to aggressively expand in the U.S., may now become a takeover target, analysts said. Defense giants Northrop Grumman and Lockheed Martin could be potential suitors.

The British company has long-term contracts with the U.S. military to provide equipment such as the Bradley tank, but may come under financial pressure as Washington seeks to reduced defense spending.

For EADS, whose German chief executive, Tom Enders, had discussed potential acquisitions in the United States before the proposed merger with BAE Systems was announced, the failure to complete the deal will again focus attention on his company’s strategy.

Gaining access to the American market is likely to remain a priority, said Mr. Aboulafia of the Teal Group.

“EADS shareholders will want to know if the company will now pursue other acquisitions,” he added.

Article source: http://dealbook.nytimes.com/2012/10/10/eads-and-bae-systems-abandon-merger-talks/?partner=rss&emc=rss

DealBook: Investors Wary Over Giant Aerospace Deal

12:21 p.m. | Updated

LONDON – Shares of the European aerospace giants EADS and BAE Systems tumbled on Thursday as investors reacted negatively to the announced merger talks between the two companies.

A leading shareholder in EADS, which is the parent of Airbus, also said it would have to review the consequences of the potential merger before making a decision about the deal.

If completed, the deal would create an industry giant with a combined market value of almost $50 billion, annual revenue of more than $90 billion; it would employ around 220,000 people worldwide.

Shares in EADS fell 10.2 percent by the close of trading in Paris on Thursday, while stock in BAE Systems, which is listed in London, dropped 7.3 percent.

At a difficult time for the industry, the companies, Europe’s two largest aerospace firms, announced on Wednesday that they were in talks about a potential merger.

In the wake of the global economic slowdown, many countries are pulling back on military spending. Sales of passenger airlines have improved recently, but have remained sluggish during the recent financial market volatility.

Any merger would also have to navigate a minefield of regulatory approvals, including in the United States and Europe, before a deal could be completed.

Despite the potential cost savings from combining operations, some of EADS’ investors, which include the French and Spanish governments, reacted coolly to the discussions.

The French conglomerate Lagardère, which owns a 7.5 percent stake in EADS, said on Thursday that it had not decided whether to support the deal.

“The Lagardère group intends to ensure that all consequences associated with the proposed EADS-BAE Systems merger are taken into consideration in determining the terms and conditions of the proposed transaction before it consents to the deal,” it said in a statement.

Under British law, EADS and BAE Systems have until Oct. 10 to decide whether to pursue a merger.

Article source: http://dealbook.nytimes.com/2012/09/13/investors-wary-over-giant-aerospace-deal/?partner=rss&emc=rss